Friday’s stock-market selloff, inspired by the Federal Reserve’s policy tilt this week, was driving the share of companies in the S&P 500 index that are trading above their 50 day moving averages to a new low for 2021.
The S&P 500 SPX, -0.93% was down more than 1% in afternoon action, weighed by the perception that the Federal Reserve is preparing the market for a post-COVID period where easy-money policies will be less prevalent.
Comments from James Bullard, the president of Federal Reserve Bank of St. Louis, on CNBC that he is advocating for an increase in benchmark interest rates, currently at a range between 0% and 0.25%, by late 2022, helped to raise investors’ anxieties.
Adding pressure to the market was the so-called quadruple witching and quarterly rebalances of indexes including the S&P 500 and FTSE Russell.
About 36% of the S&P 500’s 500 components were trading above their 50-day moving averages, down from the 38.9% of companies trading above that short-term average on Jan. 29, according to Dow Jones Market Data.
Its current level would mark the lowest share of the broad-market index trading above their 50-day averages since Oct. 30, 2020.
Earlier Friday, the S&P 500 index itself traded below its 50-day moving average at 4,181.99, before paring its decline somewhat. The S&P 500 hasn’t closed below its 50-day moving average since March 8.
Market technicians use moving averages to help gauge short-term and long-term momentum in an asset.
All 11 sectors of the S&P 500 were lower Friday, led by a 2.1% decline in financials XLF, -2.09%. The financials sector SP500.40, -2.06% was on pace to mark its sharpest weekly decline, down 5.8%, since June 12, 2020, FactSet data show.
Meanwhile, other benchmarks were also solidly lower. The Dow Jones Industrial Average DJIA, -1.22% was off 1.2% and had seen down by as many as 532 points at its Friday nadir. The rate-sensitive Nasdaq Composite Index COMP, -0.70%, which was benefiting from subdued interest rates, was down 0.6%.
The Dow was on track for its sharpest weekly decline since Jan. 29.
The small-capitalization Russell 2000 index RUT, -1.86% was trading 1.8% lower, which would also be its worst weekly slump since late January.
—Ken Jimenez contributed to this article
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